Instead of churning more taxpayer money through Private Health Insurance funds to private hospitals, the Commonwealth Government should establish a Hospital Benefits Fund (HBF), similar to the Medical Benefits Fund (MBF), with benefits going directly to patients for payments to a hospital of their choice.

Many “private” hospitals are pleading for more government subsidies. In response the Minister for Health, Mark Butler has established an internal Health Department Committee to review the problems of private hospitals. The Minister is sensible not to appoint a review that is stacked by health providers with their own barrows to push. That has been the undoing of most health inquiries in the past.

Ramsey Health’s share price has fallen 17% in the last month. The AMA tells us that ‘the review is overdue… we are seeing extraordinary cost and viability pressures on private hospitals around the country’. Catholic Health has also described the problem: “In the past five years, 71 private hospital services have closed down as a result of workforce shortages and funding from insurers failing to keep pace with soaring costs of providing care. Without immediate action, these closures will continue and more private patients will be pushed into public hospitals which are already operating over capacity, impacting patient access to timely care and increasing costs for taxpayers”.

But some private hospitals are ‘evolving, not collapsing’ according to Members Health, the voice of the not-for-profit health insurers.

In inheriting the Whitlam/Hawke legacy of Medicare the ALP has invariably chosen to muddle through rather than look at some basic problems that have arisen after over 40 years of Medicare. Before Mark Butler considers another ‘band aid’ solution, he should address a fundamental problem: how to get PHI out of the government funding loop. Why should the Australian Government fund private hospitals by churning its money through inefficient and expensive PHI? Funding should follow the individual and not be delivered via PHI.

Ross Gittins has called PHI a scam. Warren Buffett has described PHI as a tapeworm in health systems, eating away from within.

If people want private health insurance, that is........

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